Tata Sons may bankroll most of Tata Teleservices unit's dues

DoT officials had asked cos to lay down the plan so it could identify which entity would be responsible for the liabilities.

KOLKATA | MUMBAI: Tata Sons will bankroll most of the Rs 10,000 crore that its Tata Teleservices (TTSL) unit owes to the government, even though Bharti Airtel, which is buying TTSL’s mobility business, has formally assumed the responsibility to clear the dues, people familiar with the matter said.

In a letter to the Department of Telecommunications (DoT) about two weeks ago, Airtel and TTSL said the Sunil Mittal-promoted company would take care of the payment, including towards licence fee, spectrum usage charge and one-time spectrum charge, said a DoT official, asking not to be named.

“This was after we informed them that we need to have a clear understanding on who is making the payments,” the official said. But he said the money would likely come from Tata Sons, which is selling TTSL’s mobility business to Airtel on a cash-free, debtfree basis.

A top Tata Group executive close to the development said there was no question of Airtel picking up any costs on the deal. “Airtel is most likely to take an ironclad guarantee from Tata Sons that they (the Tatas) will fund them,” the official said.

A Tata spokesperson and Bharti Airtel declined to comment to ET’s queries. Tata Sons is keen to get the deal closed as soon as possible, since it will allow it to get rid of the bleeding mobility business. DoT’s approval is the last step before the closure of the deal.

DoT officials had asked the two companies to clearly lay down the contours of the sale so that it could identify which entity would be responsible for the liabilities. “We will only deal with the licence holder and therefore we will want our dues from either Airtel or TTSL,” said another DoT official, clarifying that Tata Sons might make the payments, but the dues officially must come from a licence holder.

In October 2017, Bharti Airtel said it would buy TTSL’s consumer mobility business, which would boost its revenue and customer base and give access to 4G airwaves in the 850 MHz band. The acquisition will also help it narrow the gap with market leader Vodafone Idea and expand lead over Reliance Jio Infocomm. At that time, Airtel had agreed to take on only deferred payment liabilities of Rs 1,500-2,000 crore for spectrum that TTSL had bought in auctions.

Tata Sons is also finalising the sale of TTSL’s enterprise business to Tata Communications. At present, separate pleas of TTSL and its listed unit, Tata Teleservices Maharashtra, to be merged with Bharti Airtel are with the National Company Law Tribunal (NCLT).